Labour plans to challenge Lib Dem MPs with bedroom tax vote

The party's announcement that it will hold a Commons vote next Tuesday on scrapping the measure is a test of those in Clegg's party who have condemned it.

After flooding what he once called the "blank page" with policies, Ed Miliband is setting a series of parliamentary tests for Labour's opponents. Tomorrow, the party will use an opposition day debate to stage a vote on its proposed energy price freeze. Miliband will say in his speech today on living standards: "It is workable, it will happen if Labour wins the next election. And tomorrow Conservative and Liberal Democrat MPs could vote for it. If they line up against it, the British people will know the truth: this government is on the side of the big energy companies not hard-pressed families." It's one thing for the coalition parties not to support an energy price freeze, but it's another for them to actively vote against it. 

Then on Tuesday, Labour will hold a similar vote on its pledge to scrap the bedroom tax. For Lib Dem MPs, this represents a particular challenge. As evidence has grown of the harm inflicted by the policy, Clegg's party has become increasingly uncomfortable with the government's stance. At its recent conference, the party voted in favour of a motion calling for "an immediate evaluation of the impact of the policy" and for "a redrafting of clear housing needs guidelines in association with those representing vulnerable groups including the disabled, elderly and children."

Until new guidelines are in place, it argued that there should be no withdrawal of housing benefit from those on the waiting list for social housing and that there should be an exemption for those who "temporarily have a smaller housing need due to a change in their circumstances, but whose need will predictably return to a higher level (e.g. whose children will pass the age limits for separate rooms within that period)".

But some senior figures went further, with Shirley Williams describing it as "a big mistake" and Charles Kennedy commenting: "I didn’t support it in the Commons and I’m not going to support it here. Mine is the largest geographic constituency in the whole of the UK – but it’s not untypical from any rural area, or for that matter urban area. In a rural area, you don’t have the flexibility, you don’t have the spare capacity in housing to move people vast distances." Another MP, Andrew George, has said: "It is one of the absurdities of the system that it is supposed to save money but it is likely to land the taxpayer with a bigger bill. It will inevitably force rural tenants out of villages where they have lived for years, taking them away from their extended families, schools and support networks. It will take key workers away from areas where they perform vital roles."

Clegg's recent emphasis on the "independent research" the government had commissioned on the policy was an attempt to buy some breathing space. He told the Commons: "Of course, I accept that there will be cases where for some households this change from one system to another creates real dilemmas which need to be addressed through the money we are making available to local authorities.

"To be honest, I have seen lots of widely different figures being cited about the impact of this policy - that is why we are commissioning independent research to exactly understand the impact of this."

While Clegg's words left the impression that he had announced a new review, the study was in fact announced in March by Iain Duncan Smith, who said then: "Going forward I will continue to closely monitor and adjust the implementation of the policy, including an independent evaluation by Ipsos MORI, the Cambridge centre for housing and planning research and the Institute For Fiscal Studies to ensure that the needs of these groups are effectively addressed in the longer term."

As luck would have it, the DWP will this week publish research on "public perceptions of the removal of the spare room subsidy". Should that study confirm public hostility to the measure, a significant number of Lib Dem backbenchers will feel encouraged to join Labour in the division lobby on Tuesday. 

Campaigners protest against the bedroom tax in Trafalgar Square before marching to Downing Street on 30 March 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Debunking Boris Johnson's claim that energy bills will be lower if we leave the EU

Why the Brexiteers' energy policy is less power to the people and more electric shock.

Boris Johnson and Michael Gove have promised that they will end VAT on domestic energy bills if the country votes to leave in the EU referendum. This would save Britain £2bn, or "over £60" per household, they claimed in The Sun this morning.

They are right that this is not something that could be done without leaving the Union. But is such a promise responsible? Might Brexit in fact cost us much more in increased energy bills than an end to VAT could ever hope to save? Quite probably.

Let’s do the maths...

In 2014, the latest year for which figures are available, the UK imported 46 per cent of our total energy supply. Over 20 other countries helped us keep our lights on, from Russian coal to Norwegian gas. And according to Energy Secretary Amber Rudd, this trend is only set to continue (regardless of the potential for domestic fracking), thanks to our declining reserves of North Sea gas and oil.


Click to enlarge.

The reliance on imports makes the UK highly vulnerable to fluctuations in the value of the pound: the lower its value, the more we have to pay for anything we import. This is a situation that could spell disaster in the case of a Brexit, with the Treasury estimating that a vote to leave could cause the pound to fall by 12 per cent.

So what does this mean for our energy bills? According to December’s figures from the Office of National Statistics, the average UK household spends £25.80 a week on gas, electricity and other fuels, which adds up to £35.7bn a year across the UK. And if roughly 45 per cent (£16.4bn) of that amount is based on imports, then a devaluation of the pound could cause their cost to rise 12 per cent – to £18.4bn.

This would represent a 5.6 per cent increase in our total spending on domestic energy, bringing the annual cost up to £37.7bn, and resulting in a £75 a year rise per average household. That’s £11 more than the Brexiteers have promised removing VAT would reduce bills by. 

This is a rough estimate – and adjustments would have to be made to account for the varying exchange rates of the countries we trade with, as well as the proportion of the energy imports that are allocated to domestic use – but it makes a start at holding Johnson and Gove’s latest figures to account.

Here are five other ways in which leaving the EU could risk soaring energy prices:

We would have less control over EU energy policy

A new report from Chatham House argues that the deeply integrated nature of the UK’s energy system means that we couldn’t simply switch-off the  relationship with the EU. “It would be neither possible nor desirable to ‘unplug’ the UK from Europe’s energy networks,” they argue. “A degree of continued adherence to EU market, environmental and governance rules would be inevitable.”

Exclusion from Europe’s Internal Energy Market could have a long-term negative impact

Secretary of State for Energy and Climate Change Amber Rudd said that a Brexit was likely to produce an “electric shock” for UK energy customers – with costs spiralling upwards “by at least half a billion pounds a year”. This claim was based on Vivid Economic’s report for the National Grid, which warned that if Britain was excluded from the IEM, the potential impact “could be up to £500m per year by the early 2020s”.

Brexit could make our energy supply less secure

Rudd has also stressed  the risks to energy security that a vote to Leave could entail. In a speech made last Thursday, she pointed her finger particularly in the direction of Vladamir Putin and his ability to bloc gas supplies to the UK: “As a bloc of 500 million people we have the power to force Putin’s hand. We can coordinate our response to a crisis.”

It could also choke investment into British energy infrastructure

£45bn was invested in Britain’s energy system from elsewhere in the EU in 2014. But the German industrial conglomerate Siemens, who makes hundreds of the turbines used the UK’s offshore windfarms, has warned that Brexit “could make the UK a less attractive place to do business”.

Petrol costs would also rise

The AA has warned that leaving the EU could cause petrol prices to rise by as much 19p a litre. That’s an extra £10 every time you fill up the family car. More cautious estimates, such as that from the RAC, still see pump prices rising by £2 per tank.

The EU is an invaluable ally in the fight against Climate Change

At a speech at a solar farm in Lincolnshire last Friday, Jeremy Corbyn argued that the need for co-orinated energy policy is now greater than ever “Climate change is one of the greatest fights of our generation and, at a time when the Government has scrapped funding for green projects, it is vital that we remain in the EU so we can keep accessing valuable funding streams to protect our environment.”

Corbyn’s statement builds upon those made by Green Party MEP, Keith Taylor, whose consultations with research groups have stressed the importance of maintaining the EU’s energy efficiency directive: “Outside the EU, the government’s zeal for deregulation will put a kibosh on the progress made on energy efficiency in Britain.”

India Bourke is the New Statesman's editorial assistant.